January 12, 2013

No Platinum Coin - Now, Let's Get to the Substance

The U.S. Treasury Department said on Saturday it will not produce platinum coins as a way of generating $1 trillion in revenue and avoiding a battle in Congress over raising the U.S. debt ceiling.

I've never looked into the relevant statutes and cases, so I have no idea about the legality of minting the coin. I assume it's a "political question" that a federal court is likely to avoid deciding.

I didn't embrace the idea for two reasons: First, while posing little economic risk by itself, I was afraid Republicans would engage in unpredictably irrational behavior in response to the coin that would wreak catastrophic damage. The logical response to the minting of the coin is lifting the debt ceiling to repurchase it. But the national GOP is controlled largely by a group of nutters who do not care what the consequences of their actions are.

Second, if minting the coin had worked, I think it would have just punted on the very important issue that the national GOP is controlled largely by a group of nutters who do not care what the consequences of their actions are. A showdown over the debt ceiling focuses the public's attention on that. Every time the issue comes to a head, the GOP gets more unpopular. I think the President has noticed that.

I think some people rightly fear that negotiating with the GOP over the debt ceiling risks giving things away that we shouldn't. But I look at it like this: If I am negotiating with a hostage-taker, I am willing to send in some pizza and soda, so long as no one I care about gets shot in the end. If Obama gives them some symbolic victory, like the fiscally meaningless estate tax deal that just went down a couple of weeks ago, I'm fine with it.